Companies that are willing to do some up-front heavy lifting report pretty consistent benefits from extending their enterprise resource management (ERP) systems to include suites for supply chain execution, transportation or warehouse management.

How do they manage to do it? What are the benefits and pitfalls of integrating basic ERP financial and office capabilities with logistics/transportation functions?

To get the best information possible, World Trade approached ERP experts and companies across the United States-from Rhodes International, Inc. of Salt Lake City, Utah, a manufacturer of frozen bread dough to Microcast Technologies Corporation, a Linden, New Jersey-based manufacturer of die casting products-for their insights and advice.

World trade companies in the global market that are pushing the envelope on their ERP systems are seeing "tangible pay backs, whether they are reducing inventories or being more responsive to their customers," says Ken Ruggles, Research Director for Supply Chain Management at AMR Research (www.amrresearch.com), a Boston, Massachusetts-based consulting firm.

According to Chuck Papa, director of supply chain systems at Penske Logistics' (www.penskelogistics.com) Cleveland office, "The challenge of today is for companies doing business internationally to evolve from multinationals to truly global companies with ERP systems providing the backbone." Ideally, he says they'll have global systems and processes across their entire operation operating as seamlessly as possible (as opposed to separate units with different processes and systems that don't communicate with one another).

"The processes are there today, the technologies are there, they are just mutually exclusive," adds Papa. "Companies are trying to move from interconnected parts to a single compliant process. Standard ERPs or programs will initiate and force this." Then, by logical progression, add-ons like supply chain execution software and warehouse or transportation management systems (TMS and WMS) will need to be integrated into the whole, he explains.

Even without the complex evolution Papa describes, many companies today with mature ERP systems are already experiencing huge benefits by extending those base systems to cover additional functions such as Supply Chain Execution, Warehouse Management and Transportation Systems.

Supply Chain Execution software

Supply chain execution software-this "umbrella" or overlay suite that will manage your supply chain, including a warehouse or transport package-can be tough and complicated to implement, the experts all agree, but well worth the effort for those able to stick it out.

It should provide "a networked view of the world," according to Tillman Estes, SAP's (www.sap.com) director of business development for supply chain execution with the Business Solutions Group for Manufacturing in Boston, Massachusetts. "It will include everyone from order routing and transportation planning and execution to event management, the consumer and everything in between."

Many companies only implement small portions of supply chain execution suites to address specific issues. At ArvinMeritor, a Troy, Michigan-based manufacturer of automotive systems, Steven Tracy helped deploy a "data collection" package by Clear Orbit (www.clearorbit.

com) onto their Oracle (www.oracle.com) ERP system. Launched in 2003 along with the basic ERP backend, the Clear Orbit pieces handles shipping, receiving and inventory.

"There were some technical complexities to launching both, but on the other hand we wouldn't have survived without launching this. What Clear Orbit does on top of Oracle is consolidates and streamline entry of transactional information; in the shipping area it actually adds some value-add functionality to our automotive shipping requirements. We would have great difficult keeping up with the transactions from Oracle without the Clear Orbit bolt on," says Tracy, who is senior director for Sarbanes-Oxley at ArvinMeritor.

Not that the process was painless. Tracy experienced the sorts of problems "you always get by introducing third-party technology to your system's architecture." Keeping pace with both vendors and their new software generations can be challenging. And, being a beta test case for the Clear Orbit piece meant "there were some functional and performance issues, which we've been able to work through."

Now that kinks are worked out, Tracy says the "bolt on tool is performing, or exceeding expectations, and giving us the benefits we're seeking."

Steven Fuschetti, owner of Microcast Technologies Corporation, was faced with making many component parts for an Atlanta, Georgia manufacturer of cable TV hardware with only two weeks to fulfill a significant order a few years back. He knew he had to do something. Even under less strenuous timetables Fuschetti has to keep plants going in Georgia and Mexico, which means coordinating 300 employees with customers in the telecommunication and marine industry with "multi-currency, multi-warehouse and international trade transactions and with just-in-time inventory management."

Microcast picked "one of the smallest" ERP packages that SAP produces-SAP R3-because of their complex, cross-border accounting needs. "This allows a small company like us without accounting resources to manage the paperwork for a number of companies. Now the documents, including purchase orders and sales receipts, come in electronically."

Moving beyond this base ERP system, Microcast Technologies had a small New Jersey tech company develop a Web interface with customers that Fuschetti says allows them to view purchase and shipping orders and track their shipments online, all the while being connected to the R3 system.

The customer integration piece has admittedly caused some headaches. "We made a large error in the set up of our inventory system, which you can't easily fix. We've talking about breaking it down and redoing it, which wouldn't be insurmountable, but is a nuisance. There are so many fields and so much data; we've been living with it for five years because I don't know if we can afford the fix."

Estes has some advice well worth heeding to those contemplating a move. "You really need to re-engineer the process before installing (ERP or a bolt on). You may find out that certain components of the business process aren't your core competency and want a third party to execute that."

Moreover, he adds that companies need to think of a supply chain execution suite as "core, not an aftermath. This is a way to improve your supply chain." To get the best results, he advises creating a team "from all sides of the operation to direct use of the technology. All parties to the system need input."

Glenn VanLandingham, Senior Director, Solutions Consulting, for Manhattan Associates (www.manh.com) in Atlanta, Georgia, emphasizes preparing for "exceptions" when implementing a supply chain execution suite. "When you want to tie in all these processes and integrate them, 90 percent of the time you're looking at the exceptions, which are 10 percent of the issues at hand," he explains.

Meanwhile, Steven Tracy recommends making sure the basic ERP vendor works well with the vendor providing the supply chain package. Everyone will be working around the ERP vendor's release schedule "because they have to satisfy a larger client base and a larger number of requirements. It's doubly important to find out what functionality is actually available so when you combine products they'll actually do what you're expecting," he adds.

Ruggles agrees that companies need to bring "strong, underlying planning and systems in place to this work. And, you have to have accurate information to feed into the system and make sure it can accommodate real-time data feed." It's not that the products are "over-hyped as they were in the past, but they may not be able to accommodate all complex supply chains. This is a maturity issue," he says.

Warehouse Management Systems (WMS)

Unlike the newer supply chain execution software, experts consider warehouse management systems to be far more tested and mature. What's more, the results are easier to measure as the software is designed with a more specific focus in mind.

To be sure, observes AMR's Ken Ruggles, the U.S. Department of Defense demands for radio frequency identification (RFID) tagging in warehouses are driving many companies to install WMS as a way of handling the added data RFID creates. But, he also sees many companies who are really leveraging in its own right their WMS deployments rather then "just meeting a requirement."

One company doing this is Fairchild Semiconductor International, which operates worldwide in seven countries from headquarters in South Portland, Maine. Fairchild has successfully deployed WMS in their new Korean warehouse/distribution center and is rolling it out in a China-based operation, explains Bob Scribner, Fairchild's Senior Manager, Global Logistics.

The purpose, he says, is to keep staffing to a minimum in the automated, very high-volume Korean warehouse, which is pushing out about 1,500 boxes a day with a staff of about twenty-two. "We wanted the ability to operate automated equipment like robotics to replace boxes on shelves and report inbound deliveries. On the outbound side we needed automated labeling to interface with taping machines that repackage the boxes," he explains, adding that both pieces needed to function autonomously so if one crashed the other can still operate.

SSA Global (www.ssaglobal.com) provided the warehouse piece to integrate with the company's base ERP system, which Scribner says has been in place for about four years. Reducing staffing has been "the biggest advantage. The application allows easy interface with automated equipment. Then the financials get integrated with ERP, which is fairly important because ERP integration does allow for easy movement of data between the two systems."

The main downside Scribner describes is the "surprisingly expensive" installation costs. "The product is worth the money, but expect to pay close to $1 million for the software, maintenance and integration for the sort of system we installed," he says.

A WMS add-on has also boosted productivity for the Musco Family Olive Company based in Tracy, California, one of the country's largest producers of California black ripe olives. "Imagine keeping an olive inventory with paper and an Excel spreadsheet and you can imagine why Musco wanted to automate the process," explains Ben Gibbons, demand planning manager.

"This became increasingly difficult the more olives we produced," particularly after a major acquisition doubled the company overnight, he explains. "We thought that if we got an off-the-shelf package that we would be able to scan inventory and keep it accurate without as much as effort as we had to expend in the past."

So in 2001, they purchased HighJump's (www.highjumpsoftware.com) Warehouse Advantage to replace a proprietary inventory system. The WMS solution tracks what Gibbons calls the "bright stock all the way through the production process to finally coming out as a finished good item with a tracking code that can be tracked in the event of a recall."

Although the system requires some experience with scanning, Gibbons says results have been "phenomenal with the kind of tracking and the data that is available. Because you've scanned inventory, it's become very easy to keep track of inventory and have physical audits." And there were benefits they didn't even consider, like keeping better control of all supplies in the same system to provide vendors a "snapshot view" of what's on the warehouse floor so they can keep to just-in-time shipments.

Gibbons underscores the importance of training personnel in scanning techniques prior to installing a WMS inventory system. The vendors warned them that a few hours wouldn't be enough and they were right, he said. "It required days."

VanLandingham and Scribner agree that the best results come from having a purpose for a WMS, and Scribner adds that WMS is best suited to large, high-volume facilities. VanLandingham recommends companies rethink their order and fulfillment systems before installing WMS technology rather than taking a "we-always-do-it-this-way attitude." For example, Manhattan Associates provides about 100 ways to pick goods in a warehouse and he says "you may want to take advantage of them."

Transportation Management Systems (TMS)

With trucking capacity-trucks, trailers/chassis and drivers-substantially lower than demand today (some experts see a 10 to 1 differential), there's a large potential market for companies that can benefit from a TMS system that can handle tracking and tracing of trucking.

Although capacity hasn't been an issue for Rhodes International, a Salt Lake City-based frozen bread dough manufacturing, routing has. According to Kevin Maddock, distribution manager, Rhodes was finding it difficult to "pull data out of our software, manipulate it and run our reports" from their old routing system.

The company uses Microsoft's (www.microsoft.com) Navision to serve as a base ERP system. The new routing solution, called Shipper Plus, was then integrated with the ERP system so they can now "build all of our truckload shipments and track our pooled (less-than-truckload or LTL) shipments that we use for our forward warehouses," explains Maddock.

Although the ERP system handles much of the ordering and information flow related to shipping and logistics, he says the add-on provides them the ability "to create our own queries and pull that information out of the software more easily. It's not one of the high-end supply chain software packages out there, but it's able to do everything we wanted. It's a good fit for our company."

The one minor complaint he has is that Shipper Plus doesn't handle multiple-point optimization, or the ability to assess optimal shipping points based on their eight warehouses nationwide. But he says that's not a "deal breaker."

In general, he says their experience has been "great. It's a very effective product in routing trucks and helping to manage an LTL operation. Plus, Prophesy Transportation Solutions, Inc. (www.mile.com), Bloomfield, Connecticut (manufacturer of Shipper Plus) is a company that wants to take care of their customers. Their customer service people are very responsive. Usually if we have a problem it's fixed the same day."

What he wants from a software provider is the recognition that many changes will improve their product and customer standing. "We didn't feel we should be the ones who had to foot the bill if it was going to improve their software product," he explains. "That's the real pleasure of working with Prophesy. If it's something that can benefit more than one customer, they develop it themselves."

Another positive experience with TMS software integrated to ERP comes from Unisource, a Norcross, Georgia-based marketer and distributor of commercial printing and business imaging papers. The company recently purchased a TMS solution from Transplace (www.transplace.com) to tie into its ERP system. According to Larry Ahlers, vice president of transportation, they need help managing "large, inbound shipments with multiple carriers and varying service levels."

Although it's too soon to measure results, he says there's hope the solution will "establish consistent service parameters, consolidate inbound shipments to a handful and help us utilize a minimum number of carriers. But we need to wait and see the results."

In general, experts like Peter Smith, senior vice president of Penske Logistics in Cleveland, say solutions like TMS can be problematic "when you get down to business rules that any one industry or business has. The details become hard to deal with in the way the user wants. Whether it's WMS or TMS, this frustrates us, too, when it comes to managing business rules. It's expensive, hard, time-consuming, and where the software providers make most of their money in modifying standard software to deploy in specific situations." Smith adds that the next generation of software "has to be a lot more configurable" to deal with the problem of specificity.

Ken Ruggles advises companies to save time and expenditures with their TMS add-ons by building each function out as a different module. Start with "high-level planning on how to set up my network for transportation, optimizing day-to-day activities and then higher-level management," he explains.

Although he considers TMS "a pretty mature product that generally works pretty well, "it's crucial to decide before deployment whether to operate the system in-house or outsource it to a third party on Web-hosted applications. Both models are supported pretty well."

VanLandingham believes that there's always room for improvement. In the TMS arena, he thinks the next generation will be able to handle all modes of transportation instead of focusing separately on parcel shipping, full truckload or LTL. "You can find solutions that do all kinds of optimization on parcel shipping, but not other modes or they focus on one not the other. But with carriers starting to cross lines between modes and freight forwarders handling both ocean and air, that's an area where I can see an opportunity for vendors to improve," he explains.

For best results with TMS as it now stands, he advises manufacturers to leverage your relationship with your carriers. TMS will automate information sharing, but you can't do this in a vacuum. You've got to improve communication between your company and your carriers-get your main carriers involved."